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Strategic Report – Core Strategies
Key performance
indicators
The Company assesses its performance against a wide range of measures.
These key performance indicators (KPIs) help management measure
progress against the Company’s core strategies.
Financial measures
The Board believes it is important to ensure alignment between executive management’s strategic focus and the long-term
interests of shareholders. Certain elements of executive remuneration are based on performance against the following
measures: revenue growth, adjusted PBT growth and adjusted retail/wholesale return on invested capital, which are linked
to core strategies as shown. For details of the Group’s remuneration policy, see pages 83 to 105.
KPI
Performance
Revenue growth*
This measures the appeal of the Burberry brand
to customers, however its products are sold.
Revenue in FY 2016 declined
by 1% at constant exchange
rates, with retail revenue up
1%. Wholesale declined by
2% underlying while Licensing
declined by 33% underlying,
both in line with guidance.
or more detail on the Company’s revenue
F
performance see pages 50 to 55.
Strategic link
All core strategies
Adjusted PBT growth* #
Adjusted PBT growth is a key measure
used by investors to assess the underlying
performance of the Company.
Strategic link
All core strategies
Adjusted retail/wholesale return on
invested capital (‘ROIC’)~
Adjusted retail/wholesale ROIC measures
the efficient use of capital to deliver attractive
returns on incremental investment, which is
important given the Group’s investment in
new projects. It is calculated as the post-tax
adjusted operating profit divided by average
operating assets over the period for the
retail/wholesale segment.
Measure
2016
2015
2,523
+11%
2014
2,330
+17%
2013
1,999
+8%
2012
1,857
+23%
Retail
Adjusted PBT in FY 2016
reached £421m, down
10% at constant exchange
rates. Retail/wholesale
operating profit at constant
exchange rates was down
8% and licensing down
29% underlying.
Adjusted retail/wholesale
ROIC in FY 2016 was
14.8% impacted by decline
in operating profit and
ongoing investment in
the business including
the evolution of the retail
store portfolio.
£m Underlying
growth
2,515
-1%
Wholesale
Licensing
2016
£m Underlying
growth
421
-10%
2015
456
+7%*
2014
461
+8%*
2013
428
+13%*
2012
376
+24%*
2016
%
+14.8
2015
+17.9
2014
+19.6
2013
+19.0
2012
+20.0
Strategic link
All core strategies
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Strategic Report – Core Strategies
KPI
Performance
Comparable sales growth
This measures the growth in productivity of
existing stores. It is calculated as the annual
percentage increase in sales from retail stores
that have been open for more than 12 months,
adjusted for closures and refurbishments
and includes all digital revenue.
Comparable sales in FY 2016
were down 1%, with a mid
single-digit percentage
increase from EMEIA,
unchanged in Americas and
mid single-digit percentage
decline in Asia Pacific.
Measure
%
-1
2016
2015
+9
2014
+12
2013
+5
2012
+14
Strategic link
Optimise Channels,
Pursue Operational Excellence
Adjusted retail/wholesale
operating margin#†
This measures how the business balances
operational leverage and disciplined cost
control, with thoughtful investment for future
growth, building the long-term value of
the brand.
Operating margin in FY 2016
was 15.4%, reflecting a
modest benefit from gross
margin expansion, offset by
a mid single-digit percentage
underlying increase in
operating expenses.
2016
%
15.4
2015
16.3
2014
17.5
2013
17.8
2012
16.4
Strategic link
Optimise Channels,
Pursue Operational Excellence
Adjusted diluted EPS growth#‡
Growth in EPS reflects the increase in
profitability of the business and is a key
valuation metric for Burberry’s shareholders.
Adjusted diluted EPS in
FY 2016 was 69.9p, down 9%,
reflecting a reduction in Group
profit and a higher tax rate.
Strategic link
All core strategies
Pence
Reported
growth
-9%
2016
69.9
2015
76.9
+2%
2014
75.4
+8%
2013
70.0
+14%
2012
61.6
+26%
Non-financial measures
Non-financial measures have a useful role alongside financial measures to inform decision making and to evaluate Group
performance. Burberry is evolving the way it evaluates performance in areas such as people, corporate responsibility and
customers, and will aim to disclose non-financial measures in the future. For detail on Burberry’s efforts to drive positive
social and environmental impact globally see pages 44 to 46, and for progress against 2017 environmental targets,
see page 108.
Note:
For definition of underlying growth see page 50.
* At constant exchange rates.
# For definition of Adjusted see page 50.
~ For a reconciliation of Return on Invested Capital see the Five Year Summary.
† For details of Adjusted retail/wholesale operating margin see page 53.
‡ For details of Adjusted diluted EPS growth see page 50.
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